The rumour behind the fall was that Carillion would need to resort to a rights issue to stay on top of its level of debt.
But that talk has evaporated today.
CarillionвЂ™s prospects are looking quite rosy with the average of all city analystsвЂ™ predictions pre-tax profits standing at:ВЈ151m вЂ“ 2008 ВЈ185m вЂ“ 2009
The debt that Carillion is carrying is the result of the acquisition of Alfred McAlpine, so is nothing new. As the group is achieving good earnings in the current year, the level of debt is coming down rather than going up.
One analyst said: вЂњThe need for any rights issue was wrongly attached to Carillion. When you see the huge discounts that other people need to offer to get their rights issues away in todayвЂ™s difficult conditions, Carillion will be pleased to be clear of this situation.вЂќADVERTISEMENT
CarillionвЂ™s shares stood at 400p in April last year and then slid to a low point of 180p by November.
To counter that Carillion went on the offensive, taking a pack of 15 analysts out to the Middle East for a couple of days, calling at Dubai and Abu Dhabi, to impress them with the mouth-watering prospects still to come вЂ“ massive growth in workload and top-of-the-range margins.
вЂњAfter making a big deal of the Middle East, with its 15 years of sustainable growth and margins going through the roof, people put great credence to their story,вЂќ said the analyst.
вЂњOnly the reality has been very different as oil has subsequently slumped to $38 a barrel and projects are being halted. For example, Carillion started digging the foundations to a kilometre-high tower but thatвЂ™s all come to an abrupt halt.вЂќ
Stepping back from such Middle East turmoil however, he rated Carillion a strong prospect going forward.
вЂњOur view is that CarillionвЂ™s shares are too cheap,вЂќ he commented. вЂњIt is well exposed in the UK, it has a growing utility services business, its construction is mainly in the public sector and it has a good PFI portfolio that is worth as much as its net debt.вЂќ
вЂњThere will be growth next year as a result of the McAlpine acquisition.вЂќ
Cemex suffered 36% dive in UK sales in latest three months’ figures
Controlled Group belatedly signs off 2007 results; shows ВЈ1.8m loss
HCA hopes to raise $300 million to repay debt